Fed's Rate Hike Options Eased by Subdued US Inflation Figures
US inflation numbers came in lower than expected in July, potentially giving the Federal Reserve more flexibility to weigh interest rate hikes.
The core Consumer Price Index (CPI), which excludes volatile food and energy categories, rose by just 0.2% from a month earlier and 2.5% annually, matching its slowest pace since March 2021.
Overall consumer prices increased by 0.1% from the prior month and 3.4% from a year earlier.
The Bureau of Labor Statistics data suggests that the impact of the Iran war on energy prices has continued to fade, which may give Fed officials more room to consider inflation pressures against recent hiring slowdowns.
Investors are closely watching the upcoming reports on employment and inflation before the September meeting, as well as Fed Chairman Kevin Warsh's expected remarks at the Jackson Hole symposium later this month.